“Pedal to the Metal” for Digital Acceleration . . .
I read a strangely familiar article this week.
“The Foundations of True Digital Finance Transformation” in Enterprise Times.
The article took me on a journey that many of us know only too well.
We all know the figures.
$2.3 TRILLION spent on digital transformation annually.
70% of digital transformations fail.
It still astonishes me that our ability to estimate and forecast the costs and benefits of these massive investments remains weak at best.
How do we move from a gamble to an investment?
I always return to that simple, but prescient, assertion . .
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency”.
We have all seen this in practice throughout our careers.
That painful “Aha moment”.
To be effective and efficient, digitization needs to be applied to fundamental processes that have already been optimized.
Applying technology to a flawed system will not fix the underlying problems but, instead, tends to amplify them.
In the words of one CIO after a costly digital transformation initiative, “The new problems are still the old problems”.
“If you don’t understand the process, you’re not automating, you’re gambling”.
In the quote above “process” is not referring to a workflow, or a few tasks, but an end to-end, fundamental business cycle. Our words are dangerously ambiguous.
You can count these end to-end, fundamental business cycles (end-to-end processes) on your fingers. Rarely more than 8-10 in any business, and if you do have more, you have toes too . . . 😉
The key focus in any transformation should be business impact.
How will this initiative affect revenue, COGS, working capital, EBIT?
Its simple.But it’s hard to connect the dots.
If we focus on P&L impact on the business as a whole, we stand a chance of success.
Focus on end-to-end process changes that:
- Increase revenue and margin
- Reduce enterprise cost through streamlined end-to-end process operations
- Enhance asset utilisation
- Optimise external spend, headcount, and inventory
- Cleanse balance sheet liabilities
- Improved customer engagement/service/experience
And our digitization must support these in a streamlined way.
These end-to-end business processes are complex. They have no single desirable path or journey.
- Think of your revenue cycle and the necessary variances depending on customer segment, product type, sales channel, etc.
- Or your spend cycle that varies depending on direct or indirect, spend category, tariff code, country of origin, buying channel, supplier type and value.
With end-to-end process focus as one stream, get your Master Data under control in parallel.
- Master Data of poor quality, integrity and coherence undermines every digitization attempt and dilutes and pollutes the positive impact of transformation.
- It does not have to be like “boiling the ocean”. Pareto principle is alive and well here too.
Speed is of the essence. Business value has a half-life that degrades with time.
Use the discipline of the Pareto Principle and 100 Day P&L Impact Plans.
By following these core principles, we will drive genuine P&L value in shorter cycles AND ensure that the business genuinely benefits from the promise of simplified, streamlined processes, return on data and true digital transformation.
This way we can push the “Pedal to the Metal” for Digital Acceleration.
Just be sure you are aiming in the right direction first!
Enjoy the drive!
And I just realised why it was so “strangely familiar”.
I think I might have written it . . . 😉
“Pedal to the Metal” for Digital Acceleration
Thanks for reading . . .
